In a significant development that has caught the attention of Dalal Street, DSP Mutual Fund made a decisive move on 29 May 2025 by acquiring 4.64 lakh shares of Harsha Engineers International at INR 383 apiece in a bulk deal, according to information accessed by IPO Central. This translates into an investment of nearly INR 17.77 crore, signaling strong institutional confidence in the mid-cap engineering powerhouse.
But what’s the story beneath the headline? What does DSP’s move tell us—not just about Harsha Engineers, but about India’s precision engineering and solar sectors at large?
Harsha Engineers Block Deal – The Anatomy of a Smart Bet
Mutual funds like DSP typically base bulk deal investments on a confluence of factors: valuation comfort, earnings visibility, sector tailwinds, and corporate governance quality. A bulk deal isn’t a fluke—it’s often the tip of a well-researched iceberg, supported by exhaustive financial modeling, management interactions, and macroeconomic trend analysis.
For DSP Mutual Fund, the Harsha trade likely hinges on:
- Robust Adjusted Earnings Recovery: Despite reporting a consolidated loss in Q4 FY25 due to exceptional items (impairment losses of INR 27.68 crore), Harsha’s adjusted PAT surged 19% YoY, backed by a 16.2% adjusted EBITDA growth.
- Capex-Fueled Growth Story: With INR 209 crore capex deployed in FY25 and INR 165 crore earmarked for FY26, the company is in aggressive expansion mode—often a magnet for growth-oriented funds.
- Clean Energy Pivot: The commissioning of a 10.4 MWp solar tracker PV power plant on 23 May 2025, signals green energy momentum, with synergies in Harsha’s solar EPC division, despite short-term top-line volatility.
The Business: Precision, Power & Potential
Harsha Engineers International (HEIL) is no ordinary engineering firm. It’s India’s largest manufacturer of precision bearing cages, a mission-critical component in sectors as diverse as automotive, railways, wind energy, and aerospace. The company services all top six global bearing manufacturers—NSK, NTN, SKF, Schaeffler, JTEKT, and Timken.
Despite macroeconomic headwinds and a weak Q4 headline PAT, Harsha’s full-year FY25 numbers reflect resilience:
- Revenue (Consolidated): INR 1,407.65 crore vs. INR 1,392.30 crore in FY24
- Adjusted PAT (Consolidated): INR 127.43 crore vs. INR 110.09 crore
- Engineering India EBITDA Margin: Jumped to 26.2% in Q4FY25 (adjusted)
The engineering division—particularly bearing cages and bronze bushings—continues to outperform. Bronze bushing sales more than doubled from INR 40 crore to INR 102 crore YoY, affirming Harsha’s ability to identify and scale niche segments.
The solar EPC business, though volatile (Q4 revenue down 28% QoQ), is turning a corner with improved margins and asset additions. The solar tracker plant will not only reduce energy costs but may unlock further project-based revenue visibility.
Industry Snapshot: Bearings Market Rolling Strong
The global bearing cages market—currently pegged at ~USD 4.7 billion (~INR 40,185 crore)—is forecast to hit USD 8.5 billion (~INR 72,675 crore) by 2029, driven by EV adoption, renewable energy, and industrial automation. India alone is projected to grow its bearings market at 8.3% CAGR, presenting a rich opportunity for Harsha.
Harsha’s dominance (6.5% global share in organized bearing cage market) is reinforced by:
- Manufacturing range: 20mm to 2000mm cage diameters
- 5 manufacturing sites across India, China, and Romania
- 7,500+ SKUs developed, 450 added in FY25 alone
Latest Developments: What’s New at Harsha
- Green Energy Push: The newly commissioned 10.4 MWp solar plant enhances captive energy capability and adds ESG weight—a growing checkbox for institutional investors.
- Tooling & Automation Expertise: Harsha’s in-house design, vision-camera inspection systems, and tooling manufacturing give it a tech-enabled edge that few peers can match.
- Romania Struggles, China Offsets: Harsha Romania continues to post EBITDA-level losses, but Harsha China has posted INR 12.03 crore EBITDA and INR 2.92 crore PAT in FY25, offsetting regional risk.
- IPO Funds Utilization Update: Of the INR 429.40 crore net proceeds, INR 419.67 crore have been utilized, with INR 9.73 crore pending (largely for machinery capex). The transparent deployment builds investor trust.
Outlook
In our view, Harsha Engineers presents a compelling case of a value-cum-growth bet, especially for funds looking to ride India’s precision engineering and green infra cycles.
Positives:
- Strong EBITDA and PAT recovery adjusted for one-offs
- Deep engineering pedigree, high client stickiness
- Continued investment in automation and capacity
- Early mover advantage in complex bearing cages and stampings
- ESG-compliant profile with solar self-sufficiency
Risks:
- Project volatility in solar EPC business
- Regional headwinds (Romania)
- High working capital cycle (receivables at ~78 days)
With EPS at INR 9.81 (FY25) and an improving margin profile, the INR 383 entry price by DSP implies a P/E of ~39x—not cheap, but justified for a niche, high-moat business.
Final Take
DSP Mutual Fund’s recent bulk deal is not merely a buy order—it’s a vote of confidence in Harsha Engineers’ future. As India’s manufacturing sector ascends globally and solar capex continues, Harsha is well-positioned to benefit from both megatrends. If the execution matches the ambition, Harsha Engineers may well emerge as one of India’s next mid-cap champions.
I can’t see the bulk or block deals of HARSHA in last one month